SEC files criminal raps vs Asian Capital exec

After a five month-long probe, the Securities and Exchange Commission (SEC) filed before the Department of Justice yesterday a criminal complaint against Asian Capital Equities Inc. (ACE) president Francisco Borromeo for violation of several provisions of the Securities Regulation Code.

In its complaint, the SEC accused Borromeo, a former governor of the Philippine Stock Exchange, of engaging in fraudulent activities to the detriment of ACE investors.

In particular, the SEC accused Borromeo of authorizing and using fictitious accounts, engaging in fictitious trades, selling clients’ securities without their knowledge and consent, and fabricating records and reports submitted to securities regulators.

"Documents gathered show that in a number of occasions Borromeo received sell orders from clients but because he had previously disposed of the securities without his clients’ consent and therefore had a short position, he instead executed buy orders and crossed the same with fictitious sell orders from fictitious accounts controlled," Tomas Syquia, head of the SEC’s Compliance and Enforcement Department, said.

"To cover his tracks, he doctored his daily blotters and the invoices he sent clients," Syquia added.

The alleged unethical and unlawful business practices of Borromeo led to the collapse and eventual issuance of a take-over order by the SEC for the Philippine Stock Exchange to assume control over the operations of ACE for the protection of its clients.

Violation of any provision of the SRC carries a penalty of a fine not less than P50,000 nor more than P5 million or imprisonment of not less than seven years nor more than 21 years or both.

Last Jan. 15, upon request of the SEC, the DOJ issued a hold-departure order against Borromeo.

The PSE has taken over the operations of ACE because of the latter’s deteriorating financial condition and after finding reasonable grounds it violated provisions of the SRC.

To safeguard the interest of the investing public, a cease and desist order was issued by the SEC against ACE for SRC violations. The provisions cited concern fraudulent transactions and restrictions on borrowings by members, brokers and dealers.